Stein Foresees Favorable Economic Activity in '78

Economist Herbert Stein won a favorable response from a group of realtors meeting here today when he said people want to be left alone and not be bothered by government programs.

The former chairman of the Council of Economic Advisers in the Nixon and Ford administrations also projected a generally moderate rate of monetary and economic expansion in the nation next year. Stein was fairly bullish on new housing starts, predicting about two million, up slightly from this year. He added that he foresees more action in multi-family home construction in 1978, with some slight downturn in single house starts.

On other predictions for 1978, Stein said he expects unemployment to decline from 7 to 6.5 per cent mainly because fewer teenaged persons will enter into the job market. He expects inflation to hit 6.5 per cent next year, with the economic growth rate to ease to about 4.5 per cent, down slightly from the expected 5 per cent in 1977.

Stein, who adressed one of the last general sessions of the convention of the National Association of Realtors here later told a press conference that he thinks the rise in home mortage interest rates has nearly peaked and that an income tax cut, which he expects next year, would exert upward pressure.

In regard to speculation about whether Arthur Burns will be retained as chairman of the Federal Reserve Board, Stein put himself solidly behind the reappointment of Burns as a "major educational influence" needed by the Carter administration.

He said he does not think the administration's final tax revision package will limit the amount of mortagage interest payments that could be claimed as deductions by homeowners.